Direction and Tasks of Future Social Policymaking in Response to Demographic Changes

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A na lys is of th e E ffe ct s o f F in an cin g M e th od s o n S oc ia l E xp en di tu re s P olic y R ep or t 19 -2 1 People with People in Mind K O R E A IN S T IT U T E F O R H E A LT H A N D S O C IA L A FF A IR S Policy Report 2020-12

Direction and Tasks of

Future Social Policymaking

in Response to Demographic

Changes

Lee So-young

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【Project Head】 Lee So-young

Research Fellow

Korea Institute for Health and Social Affairs

【Co-authors】 Lee Yun-kyung

Research Fellow

Kim Se-jin

Associate Research Fellow

Direction and Tasks of Future Social Policy making in Response to

Demographic Changes

Korea Institute for Health and Social Affairs Building D, 370 Sicheong-daero, Sejong city 30147 KOREA

http://www.kihasa.re.kr

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Ⅰ. Introduction ···1

Ⅱ. Falling Birth Rates and Future Social Policy ···9

1. Education Policy ···11

2. Labor Policy ···16

3. Child Health Policy ···20

Ⅲ. Population Aging and Future Social Policy ···25

1. Middle-Aged Employment Policy ···27

2. Medical Workforce Policy ···31

3. Long-Term Care Policy ···35

Ⅳ. Conclusion ···41

References ···47

KOREA INSTITUTE FOR HEALTH AND SOCIAL AFFAIRS

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<Table 2-1〉 Neonatal Specialist Availability: Korea vs. Japan ···21 〈Table 3-1〉 Relative Index Model Projections of Mid- to Long-Term

Supply of and Demand for Doctors ···32 〈Table 3-2〉 Long-Term Supply of and Demand for Nurses ···33 〈Table 3-3〉 Change in Admissions of Medical Schools and Projections

of Doctor Supply and Demand ···34 〈Table 3-4〉 LTC Providers (2019) ···37 〈Table 3-5〉 LTC Workforce ···37

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〔Figure 2-1〕 Child Service Budgets of OECD Member States as

Percentages of GDP ···12

〔Figure 2-2〕 Daycare and Kindergarten Enrollment Rates ···13

〔Figure 2-3〕 EAP Projections by Scenario (2018 = 100) ···17

〔Figure 2-4〕 Statistics Korea’s Middle-Level Projections of the Age Makeup of the EAP ···18

〔Figure 3-1〕 Economic Participation Rates by Age ···28

〔Figure 3-2〕 Average Retirement Ages ···29

〔Figure 3-3〕 Number of LTCIS-Eligible Elderly ···36

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People with People

in Mind

Ⅰ

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Birth rates are plummeting in South Korea at an un-precedented rate. The Korea’s total fertility rate (TFR) has been declining steadily since reaching its population-replacement level at 2.1 in 1983 (Statistics Korea, 2018 and 2017). The TFR seemed to level out somewhat at around 1.6 in the 1990s, but has been plummeting since the Asian Financial Crisis of 1998, and dipped to the nadir of 1.08 in 2005. Although it did rise marginally afterward, the TFR has remained steadfastly at or below 1.3 since then (Statistics Korea, 2018 and 2017). Statistics Korea, in fact, confirmed that the TFR reached a new record low, at 0.98, in 2018, while the total number of new-borns that year reached another record low, at 326,900, since the organization began compiling official statistics in 1970 (Statistics Korea, 2018). On the other hand, the increase in life expectancy and transition of Korean baby boomers into retire-ment en masse are two major factors that are poised to expand the senior population, aged 65 or older, in Korea at an ex-ponential rate. The percentage of late-stage seniors aged 80 or

1) This report is a summary of Lee S. et al. (2019). Decreasing Natality and Population Size and Future Social Policy, and Lee, Y. et al. (2019). Increasing Elderly Population and Future Social Policy. See the two studies for detailed analysis.

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4 Direction and Tasks of Future Social Policymaking in Response to Demographic Changes

older and in need of protection and assistance is expected to multiply especially rapidly, generating a host of likely social changes.

The middle-of-the-road projections of natural increases and prospects of natality and mortality in Korea forecast that the number of newborns will continue decreasing, falling from 350,000 in 2017 to as low as 210,000 by 2067 (Statistics Korea, 2019b). Low-level projections, meanwhile, forecast the number to drop even further down to 140,000 by the same year. Regardless of the projection estimates, it remains certain that the number of newborns in Korea has been on a steady downturn for years, and will continue decreasing in the future.

The shrinking newborn population means that the underage population (aged from under one to 14) will likewise shrink, as will the working-age population (aged 15 to 64). The Special Future Demographic Projections hold that the underage pop-ulation will be more than halved from 6.72 million (13.1 percent of the national population) in 2017 to 3.18 million (8.1 percent) by 2067. The projections forecast that the underage population will range from 4.43 million (8.7 percent) to 5.79 million (10.8 percent) in 2030 and from 2.13 million (6.3 percent) to 4.54 million (10.0 percent) by 2067. The working-age population is similarly projected to decrease from 37.57 million (73.2 percent) in 2017 to 17.84 million (45.4 percent) by 2067 (Statistics Korea, 2019b).

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Ⅰ. Introduction 5

In the meantime, the elderly population is expected to multiply. The Special Future Demographic Projections from 2019 forecast that the number of seniors in Korea will rise from 7.68 million in 2019 to 10.51 million by 2025, and further to 15.23 million by 2035, nearly double the current population size, and will begin to decrease only after reaching a projected peak of 19.01 million in 2050. The number of seniors aged 85 or older in the late stages, in particular, is also expected to multiply from 0.71 mil-lion in 2019 to 1.12 milmil-lion in 2025 and 4.05 milmil-lion by 2050 (Statistics Korea, 2019b).

The Korean government has been seeking to prepare for, and counter the effects of, these abrupt demographic changes by establishing and implementing the Basic Plan on Low Fertility and Aging Society (hereinafter “the Basic Plan”) every five years since 2006. With statutory support from the Framework Act on Low Birth Rate in an Aging Society (FALBRAS), the Basic Plan lays down the intermediate- to long-term directions of national policy on low fertility and population aging, as well as specific policy objectives and tasks. These and other efforts, however, have yet to stem the tide of falling birth rates. Government ini-tiatives under the Basic Plan have thus come under increasing criticism and demand for reform from all sectors of society. In response, the Korean government has recently renounced its focus on raising the TFR to a certain level and announced new plans for revolutionizing the population policy under a new

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6 Direction and Tasks of Future Social Policymaking in Response to Demographic Changes

paradigm. The Presidential Committee on Ageing Society and Population Policy (PCASPP) released its Low Birth in an Aging Society Policy Roadmap in December 2018, articulating a new policy focus for improving quality of life for all generations and ushering in a more inclusive society by promoting solidarity and integration among socioeconomic classes, genders, and generations (PCASPP, 2018). The roadmap garnered attention especially for replacing the outdated focus on raising birth rates with measures to guarantee quality of life for all gen-erations and increase social investment in the wellbeing of fu-ture generations (PCASPP, 2018).

In this report, recognizing the need for a new paradigm of pop-ulation policy capable of responding with greater flexibility to the falling birth rates and aging of Korean society, we explore, in depth, the forecasted changes of various aspects of society due to these demographic changes, and identify policy implications for Korean society in the future. Our focus is the sweeping and mac-ro-level effects of demographic changes due to the decrease in the number of newborns and the overall population, on the one hand, and population aging, on the other.

In particular, we analyze the implications for the social policy on education and labor that stands to be affected most by the plummeting birth rates. Furthermore, we explore the future di-rection of the social policy needed to enhance quality of life for children, particularly regarding their health. Embracing the

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tran-Ⅰ. Introduction 7

sition to preparing for and adapting to decreasing birth rates rather than raising the birth rates, we review available policy op-tions in a comprehensive manner.

We also explore ways of improving quality of life for Korea’s elderly by identifying future directions for the elderly employ-ment policy, healthcare workforce supply policy, and long-term care policy. We expect our analysis to contribute to the efforts being made to help Korea better manage its falling birth rates and population aging by shifting the focus of future social policy from meeting abstract policy objectives to en-hancing quality of life for individuals.

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People with People

in Mind

Ⅱ

Falling Birth Rates and

Future Social Policy

1. Education Policy 2. Labor Policy 3. Child Health Policy

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1. Education Policy

The education policy in Korea has so far sought to respond to the challenge of the falling birth rates by increasing the quantity of available educational resources. It is now time to shift our fo-cus and start investing in the quality of education for future generations. In this section, we present a new approach to edu-cation policy, stage by stage, reflecting the growing awareness that human capital is one of the essential engines of economic growth.

(1) Preschool Education Policy

Existing literature on the importance of preschool education supports the consensus on the positive long-term effects of preschool education. It is therefore important to provide quality education for preschoolers as part of efforts to augment human capital in Korea.

The appropriateness of preschool education can be assessed in terms of the budget invested in it and the content of the policy backing it. A comparison of Korea’s preschool education budget (not including cash benefits, such as the child allowance, paid to

Ⅱ

Falling Birth Rates and Future

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12Direction and Tasks of Future Social Policymaking in Response to Demographic Changes

parents) to those of major member states of the Organisation for Economic Cooperation and Development (OECD) shows that, al-though Korea’s budget for children-related services, which was a mere 0.2 percent of its gross domestic product (GDP) in 2005, was ranked near the bottom of the list in 2005, it rapidly in-creased to 0.9 percent by 2013, coming close to the OECD average. Since 2009, the Korean government has been increasing the support for preschool education, going so far as to pay the tuition for daycare and preschool education for infants and tod-dlers of households at all income levels starting in 2013 (Lee, 2017).

〔Figure 2-1〕 Child Service Budgets of OECD Member States as Percentages of GDP

(Unit: percentage)

Note: Counting budgets for supporting daycare for children aged five or under. Source: Lee, C. (2017). Analysis of the Preschool Daycare Support Policy: Focusing on

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Ⅱ. Falling Birth Rates and Future Social Policy 13

To provide quality preschool education, it is critical to en-sure that there are sufficient numbers of daycare centers, kin-dergartens, and other such facilities catering to children. As of 2017, 93.6 percent of children aged three or over in Korea were enrolled in daycare centers or kindergartens. The per-centage of children under the age of three enrolled in daycare had also increased to 71.9 percent.

〔Figure 2-2〕 Daycare and Kindergarten Enrollment Rates

(Unit: percentage)

Note: The primary data are from MOHW (each year). Daycare User Statistics; MOE-KEDI (each year). Education Statistics Yearbook: Preschool and Elementary School Statistics; and MOPAS (each year). Resident-Registered Population Statistics.

Source: MOHW and KIHASA (2018). Social Security in Statistics 2018. MOHW.

The physical infrastructure supporting preschool education in Korea appears to have reached a sufficient level. Yet there ap-pear to be many needs unfulfilled regarding the quality of pre-school education and daycare. Lee (2013) demonstrates that

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pa-14Direction and Tasks of Future Social Policymaking in Response to Demographic Changes

rents of preschoolers still largely prefer public daycare centers, which are believed to provide education and care of better quality.2)_{However, existing public daycare centers cater to less}

than 10 percent of the preschooler population, and access to these facilities varies widely from region to region.

Investment in preschool education and care should therefore be tailored toward increasing the supply of daycare services and in-creasing the number of public daycare facilities, particularly in regions that are lacking in them. State intervention is also needed to enhance the quality of services provided by private facilities.

(2) Elementary School Education Policy

The types and amounts of knowledge and learning skills that schoolchildren are supposed to acquire, develop, and master vary widely from grade to grade. It is therefore crucial to provide guidance tailored to the specific grades and stages of develop-ment these children are in. As important as laying the foundation for learning achievements is enabling schoolchildren to acquire basic non-academic skills as well.

The Korean government has been making efforts to reduce the number of students per class in an attempt to improve the quality

2) Lee (2013) notes that, whereas all public daycare facilities scored 90 percent or higher on the assessments for certification and recertification, private facilities’ scores generally remained in the 80-percent range, suggesting variance in the quality of services provided by the two types of facilities.

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of elementary school education. As a result, there were 23 stu-dents per class in Korea on average in 2016, similar to the OECD average of 21 per class (OECD, 2018). The number of students per class is likely to decrease further in the coming years due to the falling birth rates.

There are two main objectives concerning the future of ele-mentary school education in Korea. First, efforts are needed to reduce the inequality of academic performance between students, especially by providing enhanced support so that children can keep making progress as they advance to higher grades. This will require establishing an objective standard for gauging students’ academic performance and increasing programs, launched under the revised curriculum of 2015, that provide Korean language and mathematics tutorials for students struggling academically in school.

Second, non-academic, non-cognitive education focusing on personality development and training should be increased. There is not yet a curriculum for character-building education in ele-mentary schools today. This serious deficiency must be addressed. Specific guidelines should be developed to enable schools to help schoolchildren with character-building, and a system of non-cognitive capability development should be es-tablished, with appropriate new subjects introduced into the school curriculum.

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2. Labor Policy

(1) Overall Labor Force Projections

The existing labor force in Korea is not expected to decrease drastically in terms of absolute size into the mid-2030s. Things are much more uncertain 20 years down the road, however, when the generation being born today will enter the workforce.

Korea’s economically active population (EAP), which currently stands at 28.35 million, is expected to peak at 28.71 million in 2022 and begin to decrease afterward (Figure 2-3). The mid-dle-level projection from Statistics Korea forecasts that the EAP will be 17.81 million, or 62.8 percent of what it is now, by 2065. A more optimistic projection forecasts 18.61 million (65.7 per-cent) by the same year. Pessimistic projections forecast 16.12 million to 16.49 million (56.9 percent to 58.2 percent) by 2065.

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〔Figure 2-3〕 EAP Projections by Scenario (2018 = 100)

Note: The EAP sizes for 2065, based on long-term demographic projections by sex and age, are charted here as percentages of the 2018 size.

Source: Lee, S. et al. (2019), Chapter III, based on Statistics Korea (2019b). Special Future Demographic Projections 2017-2067 (press release, March 28, 2019).

Expected to play a greater role in the Korean labor market in the coming years than the changing absolute size of the EAP is the rapid aging of the existing workforce. Figure 2-4 charts the middle-level projections of Statistics Korea regarding the changing age makeup of the Korean EAP. The most prominent change is the increase in the percentage of elderly workers. Seniors aged 75 or older, who make up 2.2 percent of the EAP, are projected to grow to 12 percent or even more of the EAP by 2065. Seniors aged 65 to 74 are also projected to increase their share from 6.2 percent today to 16.5 percent by 2065. In con-trast, the percentage of relatively younger workers is expected to decline drastically over the next two or three decades.

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〔Figure 2-4〕 Statistics Korea’s Middle-Level Projections of the Age Makeup of the EAP

Source: Lee, S. et al. (2019), Chapter III, based on Statistics Korea (2019b). Special Future Demographic Projections 2017-2067 (press release, March 28, 2019).

(2) Policy Responses

To counteract the adverse impact of the shrinking youth pop-ulation on Korea’s labor force, it is critical to reform the educa-tion and labor market systems, paying particular atteneduca-tion to en-hancing the elasticity of the human capital supply and inter-sec-toral mobility of workers in response to anticipated changes in labor demand. Investment in education should be tailored toward improving the quality of education to countervail the influence of the shrinking quantity of the youth labor supply. Preschool edu-cation and daycare should be improved, with radical reforms made to the curricula for elementary and secondary education so as to enable schoolchildren and students to adopt and harness the essential skills required of the future workforce. Interdisciplinary

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barriers should be lowered and new disciplines encouraged in higher education so that higher education institutions can respond more flexibly and agilely to the changing conditions in the labor market. Finally, the higher education curricula should be rede-signed so as to shift the focus from producing specialized work-ers to producing a general workforce capable of rapidly acquiring new knowledge, information, and skills and adapting to changing work environments.

The employment and training systems of businesses should also evolve. By the time those born in the 2000s enter the labor market, employers will have far fewer workers to choose from than they used to. They will have to adapt and manage the labor demand not simply by recruiting new workers, but also by re-training existing employees and recruiting workers from other disciplines or industries.

Support for working women will also form an essential part of the policy strategy for offsetting the shrinking workforce and decreasing productivity. In the long term, more and more seniors should be hired as well.

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3. Child Health Policy

(1) High-Risk Births

Korean women today are getting married later and conceiving and giving birth later, too. The risk of birth defects associated with the older age of mothers has been on the rise across Korean society. The percentage of high-risk neonates is indeed rising, as are fertility treatment demand and the multifetal pregnancy rate. Whereas 2.8 percent of newborns were twins or triplets in 2008, the percentage jumped to 4.2 percent in 2019. The average age of mothers who had multiple births in 2018 was 34.3 years old, which is 1.6 years older than single-birth mothers, who were 32.7 years old on average.

Pregnant women with health risks, such as gestational hyper-tension or diabetes, also face increased risks of neonatal com-plications, including premature births and low birthweight newborns. The percentage of premature newborns (born before the gestational age of 37 weeks) rose from 5.5 percent in 2008 to 7.8 percent in 2018. low birthweight newborns, furthermore, made up 6.2 percent of all newborns in 2018, as opposed to 4.9 percent in 2008.

Despite the significant increase in high-risk births, the number of doctors specializing in neonatal care in Korea remains dismally low compared to Japan, a society that is experiencing similar

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birth rate problems. In 2016, there were only 122 pediatricians specializing in neonatal care in Korea, each handling 3,455 new-born cases on average. Compare this to Japan’s 1,221 neonatal specialists, who handle 810.8 newborn cases (HIRA and Korean Society of Neonatology, 2017).

<Table 2-1〉 Neonatal Specialist Availability: Korea vs. Japan

Subject Korea Japan

Number of newborns (2016) 421.523 990,000 Number of neonatal specialists 122 1,221 Ratio of newborns to neonatal

specialists 3,455 810.8

Source: HIRA and Korean Society of Neonatology (2017).

In addition to the shortage of neonatal specialists, delays in the transportation of patients in urgent need of perinatal care is an-other fatal issue resulting in severe health complications or even deaths of newborns.

As the demand for medical institutions and practitioners spe-cializing in neonatal care for high-risk babies will continue rising, it is important to expand the available infrastructure and work-force to meet that demand. A system of perinatal care should also be established nationwide, with a national center for the health of the mother and the child serving as the command center. Legal procedures concerning disputes over perinatal care should also be improved and streamlined, while obstetric, neonatal, and medical support divisions are added to regional perinatal centers. Plans

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are also needed to ensure the systematic development of the medical workforce, with regional centers established in regions with essential resources and medical fees differentiated.

The national center for the health of the mother and the child should also centralize all communications regarding the trans-portation of perinatal patients by identifying and locating the best institutions capable of receiving new patients and ensuring im-mediate transfers. At the core of such arrangement would be a digitalized transfer information system, which should include features that ensure the uninterrupted transfer of patients from obstetric hospitals to tertiary hospitals with neonatal intensive care units.

(2) Policy on Health Management for Children and Youth

The most important parts of health management are diag-nosis and sustained follow-up. Korea’s National Health Insurance provides for checkups for infants and toddlers before the age of six, schoolchildren, employees, and adults of certain ages. Some cancer screenings are also covered by the public health insurance. In other words, there is a system in place that supports the continued monitoring of the healthy development of children from birth to their teenage years, allowing for time-ly intervention in cases that warrant care.

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management, however, is flawed in two ways. First, it provides the first checkup too late. Second, the list of issues screened for is not comprehensive. The current system provides for a total of seven free checkups from four months of age to 71 months. In other comparable societies, however, the first checkup is done within the first four weeks of the newborn’s life. Newborns are given at least two or three checkups. Critics have pointed out that the existing system of infant checkups in Korea fails to identify issues that should be checked in the very first weeks and months of a baby’s life. Even the existing checkups omit tests that are best performed as early as possible in the child’s life, such as vision and hearing tests. The absence of systematic follow-up based on the results of underage checkups also makes it difficult to monitor the health of chil-dren in an effective manner.

A major way of managing the falling birth rates in Korea is maximizing the survival of newborns and minimizing their health risks as a first step toward their growth into healthy adults. It is also equally important to ensure effective monitoring of the health of children and youth, and to educate them properly on ways of preventing lifestyle diseases. There needs to be a sys-tem that ensures the monitoring of the healthy development of children from birth to their teenage years so as to ensure early and timely intervention and preventive care where necessary. The current system of free infant and toddler checkups should be

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expanded into a larger system that oversees checkups for schoolchildren and teenagers and made part of public healthcare that provides checkups for all age groups.

Primary care institutions should be at the heart of the underage health management system in order to maximize its effectiveness. Early tests and interventions are critical for the wide range of diseases that have been increasingly affecting Korea’s youth recently, such as asthma, atopic dermatitis, and mental health issues. Primary care institutions should be tasked with detecting and consulting on these cases early, and high-er-level hospitals should then be required to confirm primary practitioners’ diagnoses and decide the eventual course of treatment. Primary and higher levels of care should also be in-tegrated to maximize the convenience of underage patients so that they can receive proper and consistent care at all levels of the medical system. Primary care institutions, moreover, should become centers that provide education and information on under-age health manunder-agement. These changes will contribute sig-nificantly to improving the health of children and youth in Korea.

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People with People

in Mind

Ⅲ

Population Aging and

Future Social Policy

1. Middle-Aged Employment Policy 2. Medical Workforce Policy

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1. Middle-Aged Employment Policy

Population aging in Korea is expected to accelerate even fur-ther as the first generation of Korean baby boomers, born in 1955, begin to join the ranks of seniors (defined as individuals aged 65 or older) in 2020. Korean baby boomers are burdened with the uncertain financial prospects of old age as they have been forced to exit the labor market without having been able to properly secure income for their post-retirement years. In this chapter, we shall survey the current status of employment and retirement for middle-aged workers in Korea,3) _and

ex-plore ways of improving the employment policy to promote their continued employment.

(1) Middle-Aged Employment

Our survey of the current working status and conditions of the

3) There is not yet a widely accepted consensus on the definition of middle-aged workers in Korea. In the context of policy research on elderly workers and the labor market, researchers’ primary interest is workers aged either from 50 to 64 or from 55 to 64. While workers in their 50s and 60s are the main concern of this chapter, we will specify the ages of workers the policy should target when doing so is necessary in the given context of the discussion.

Ⅲ

Population Aging and

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middle-aged in Korea reveals that the middle-aged in Korea are more actively engaged in the economy than ever. The economic participation rate of Koreans in their 50s has been rising rapidly, while the percentage of working Koreans in their 60s has also been growing. Whereas, in 2000, only 68.8 percent of Koreans in their 50s were working, the figure had shot up by 8.3 percentage points to 77.1 percent by 2018. This increase is all the more striking when we consider the fact that the economic partic-ipation rates of Koreans in their 30s and 40s managed to grow by 3.1 percentage points and 1.8 percentage points, respectively, over the same period of time. The economic participation rate of Koreans in their 60s also increased by 3.2 percentage points. 〔Figure 3-1〕 Economic Participation Rates by Age

(Unit: percentage)

Source: Statistics Korea (each year). Economically Active Population Surveys: Addenda on the Elderly (Aged 55 to 79) (raw data reanalyzed) (https://mdis.kostat.go.kr/extrac t/extYearsSurvSearch.do?curMenuNo=UI_POR_P9012, retrieved on July 8, 2019).

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Ⅲ. Population Aging and Future Social Policy 29

Although Korean law stipulates a retirement age of 60, the majority of workers actually retire from their main careers be-fore they reach that age. In fact, the average age at which workers aged 55 to 64 retired from their main careers was 49.1 years old in 2018, falling almost 11 years short of the legal tirement age. The average age at which Koreans have been re-tiring from their main careers has been falling over the years. As Figure 3-2 shows, the average was 50.0 years old in 2005. After some fluctuations, it dropped to 49.1 years old in 2018.4)

〔Figure 3-2〕 Average Retirement Ages

(Unit: years old)

Source: Statistics Korea (each year). Economically Active Population Surveys: Addenda on the Elderly (Aged 55 to 79) (raw data reanalyzed) (https://mdis.kostat.go.kr/extract/ extYearsSurvSearch.do?curMenuNo=UI_POR_P9012, retrieved on July 8, 2019).

4) Our survey of workers at age 60 (the legal retirement age) also revealed that the average retirement age for these workers, while slightly older than the overall average, has also been falling.

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(2) Future Direction of the Middle-Aged Employment Policy

The key to managing the rapid aging of the Korean population is minimizing the retirement of middle-aged Korean workers from their main careers and the labor market altogether (Nam, 2019). This can be achieved in two ways. First, middle-aged workers should be able to work longer in their main jobs with policy support for their continued employment. Second, greater policy support is needed for the reemployment of middle-aged workers who retire from their main careers.

In order for the middle-aged to continue working longer in their main careers, the various factors that promote early retire-ment should be removed. One of these factors is the se-niority-based wage practice that is dominant in Korea. When it was first introduced, seniority-based wages served as a power-ful incentive for young workers to continue working in their re-spective jobs and thereby contribute to the rapid growth of the Korean economy (Nam, 2019). Now that the Korean economy is no longer growing at the same pace and Korean society is aging at an accelerated rate, maintaining the same seniority-based wage practice is likely to prompt more and more workers to re-tire from their main careers earlier than the law stipulates. As the increasing life expectancy in Korea also adds more working years to individuals’ lives, it is high time to reform the retirement age and wage practice.

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Active policy support will also be crucial to ensure the retrain-ing and reemployment of middle-aged workers who retire from their main careers early.

2. Medical Workforce Policy

The growing percentage of seniors in the Korean population also means increases in medical costs for society. An aging soci-ety entails growing demand for medical care and medical workers. Policy responses are certainly needed to anticipate and manage that demand. In this section, we shall review whether the current policy is capable of producing the medical workers nec-essary to meet the anticipated increases in the demand for medi-cal care.

(1) Medical Workforce Demand and Supply Projections

The shortage of doctors in Korea is becoming critical as medical schools continue reducing the number of students they admit, while hospitals themselves are also maintaining their rigid employment practices. Projections based on the supply of doctors (number of licensed doctors working) and the demand as of 2018, as well as the supply and demand trend over the years 2001 through 2018, forecast that there will be 8,566, 18,585, and 58,764 fewer doctors than needed by 2025, 2030,

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and 2050, respectively, far greater than the Ministry of Health and Welfare (MOHW, 2017)’s projected shortage of 7,647 doc-tors by 2030. These projections, moreover, do not reflect the current administration’s plan to enhance the coverage of the public health insurance. Also, the shortage of doctors in Korea could be far worse than those projections if the enhanced pub-lic insurance coverage lead to greater demand for medical care. 〈Table 3-1〉 Relative Index Model Projections of Mid- to Long-Term Supply

of and Demand for Doctors

(Unit: number of doctors) Subject 2018 2020 2025 2030 2040 2050 Based on 2001 Supply (A) 124,507 130,245 144,590 158,935 187,625 216,315 Demand (B) 146,563 155,541 180,361 209,002 266,432 323,863 A-B -22,056 -25,296 -35,771 -50,067 -78,807 -107,548 Based on 2018 Supply (A) 124,507 130,245 144,590 158,935 187,625 216,315 Demand (B) 124,507 132,117 153,156 177,520 226,299 275,079 A-B 0 -1,872 -8,566 -18,585 -38,674 -58,764

Nurses are therefore expected to be in oversupply in the future. Our projections forecast that there will be 528,000, 673,000, and 1,771,000 nurses in Korea by 2025, 2030, and 2050, respectively, far surpassing the clinical demand figures of 258,000, 280,000, and 370,000, respectively. In consequence, the employment rates of nurse trainees are expected to rise from 42.9 percent in 2010 to 51.9 percent in 2020, and then fall to

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29.8 percent and 20.9 percent, respectively, by 2040 and 2050. However, our projections include only nurses hired by medi-cal/clinical institutions and do not include nurses active in non-clinical fields. The overall supply and demand projections may change somewhat depending on the demand for nurses in non-clinical fields.

〈Table 3-2〉 Long-Term Supply of and Demand for Nurses

(Unit: number of nurses)

Subject 2000 2010 2020 2030 2040 2050 Supply (A) 160,295 270,274 425,439 672,998 1,091,975 1,771,785 Demand (B) 65,707 116,071 220,741 280,538 325,456 370,374 B/A (%) 41.0% 42.9% 51.9% 41.7% 29.8% 20.9%

(2) Future Direction of the Medical Workforce Supply and

Demand Policy

The policy implications of our projections of future medical workforce supply and demand, in light of population aging, can be summarized as follows.

As the admissions of medical schools play the decisive role in doctor supply, it is necessary to increase the gross admissions of all medical schools in Korea to at least 4,000 to 5,000 by 2020. To stem the shortages of doctors more effectively, admissions should be increased to 6,000. One way to increase admissions is to foster diversity in the education and training of future doctors.

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Also, legal flexibility should be given to medical schools so that they may introduce new departments. In addition to increasing the admissions of existing schools, public medical schools should be added to national universities outside Seoul to increase the number of future doctors working in public medicine. As doctors in Korea typically undergo six to 10 years of training before they become fully licensed practitioners, it is crucial to start increas-ing the supply of available doctors as soon as possible.

〈Table 3-3〉 Change in Admissions of Medical Schools and Projections of Doctor Supply and Demand

(Unit: number of doctors) Reference point Admissions level 2025 2030 2040 2050 Based on 2001 Present -35,771 -50,067 -78,807 -107,548 4,000 -35,771 -41,866 -58,486 -75,107 5,000 -35,771 -36,866 -43,486 -50,107 6,000 -35,771 -31,866 -28,486 -25,107 Based on 2018 Present -8,566 -18,585 -38,674 -58,764 4,000 -8,566 -10,384 -18,353 -26,323 5,000 -8,566 -5,384 -3,353 -1,323 6,000 -8,566 -384 11,647 23,677 Note: Supply-demand difference = supply - demand

The demand for nurses in Korea is also growing thanks to the recent integration of nursing and care services and increasing number of services involving nurses visiting patients in their homes. The Korean government has also begun to implement measures to increase hospitals’ demand for nurses. While both

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supply and demand are growing, nursing colleges in Korea have also radically increased their admission capacity in recent years, while the rate of increase in demand thanks to the in-tegration of nursing and care services will likely decline once the service program comes to an end. It is therefore important to increase chronic disease management services and nursing homes at the local level in order to ensure the employment of the increasing number of nurses.

3. Long-Term Care Policy

(1) Long-Term Care (LTC) Policy Today

The number of seniors eligible to receive govern-ment-subsidized long-term care (LTC) has increased dramati-cally since the Long-Term Care Insurance for Seniors (LTCIS) was introduced in 2008. Specifically, the percentage of eligible seniors more than doubled from 4.2 percent of the elderly pop-ulation in 2008 to 9.6 percent, or 772,000, in 2019, reflecting the policy efforts that have been made over the years to expand the reach of the LTCIS.

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〔Figure 3-3〕 Number of LTCIS-Eligible Elderly

Source: NHIS (each year). LTCIS Statistics Yearbooks. Retrieved from https://www.nhi s.or.kr/menu/boardRetriveMenuSet.xx?menuId=F332a on October 15, 2019.

The number of LTC providers in Korea was 24,953 in 2019, of which 5,543 were residence-type facilities and 19,410 were agencies providing services for seniors in their own homes. The majority of LTC providers in Korea are either individuals or corporations. Public providers make up only 2.1 percent of res-idence-type facilities and 0.7 percent of agencies providing at-home care.

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〈Table 3-4〉 LTC Providers (2019)

Subject

Residence-type facilities Agencies providing at-home care

Subtotal Nursing _homes _homesGroup Subtotal1) Care at

home Bathing at home Nursing at home Day/nig ht care Short-te rm care Equipm ent rental Total 5,543 3604 1939 19,410 15,305 11,121 795 4,179 162 1,975 Individ uals 4,060 2303 1757 16,641 13,496 9,879 661 1,010 121 1,701 Corpor ations 1,354 1188 166 2,554 1,718 1,184 127 3,035 36 262 Local govern ments 114 104 10 134 30 17 3 120 5

-Note: 1) The subtotal for agencies providing at-home care does not include agencies in overlapping categories.

Source: NHIS (each year). LTCIS Statistics Yearbooks. Retrieved from

https://www.nhis.or.kr/menu/boardRetriveMenuSet.xx?menuId=F332a on October 15, 2019.

There were 492,000 workers providing LTC, 90 percent of whom were professional care workers. The total also includes social workers, nurses, and nurses’ aides.

〈Table 3-5〉 LTC Workforce

Subject _workersSocial

Doctors (incl. part-time)

Nurses Nurses’ _aides

Physical/oc cupational therapists

Care

workers Nutritionists Total Overall 26,395 2,358 3,312 12,054 2,350 444,525 1,131 492,132 Agencies 19,610 104 1,793 4,567 361 377,726 69 404,237 Facilities 6,831 2,324 1,582 8,301 2,114 73,082 1,067 95,301 Source: NHIS (each year). LTCIS Statistics Yearbooks. Retrieved from https://www.nhis.

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Population aging and the increasing late-stage senior pop-ulation are expected to increase the demand for LTC radically in the coming years. The growing demand, in turn, will require increasing the number of LTC providers and workers, partic-ularly in innovative ways as the consistent drop in birth rates will mean that there will be fewer and fewer new workers en-tering the field.

(2) Future Direction of LTC Policy

As the elderly population will continue increasing, in terms of its size and percentage of the total population, in Korea, it will be crucial to train the medical workforce and ensure a suffi-cient supply of medical workers so that the growing demand for medical and nursing care can be met in a reliable manner.

Policy efforts are especially needed to increase public LTC providers. The vast majority of LTC providers today are for-profit private operators. The shortage of public LTC hinders the realization of the public value of LTC. Public LTC providers should thus be substantially increased in the future to meet the growing demand, both in quantity and quality.

The increasing number of seniors in need of LTC also requires increasing the workforce catering to them. Aged societies world-wide have already experienced the difficulties of producing suf-ficient care workers and launched various measures to solve the

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problem. Japan, for example, has begun to source more care workers from abroad. Regions in Korea that are already more aged than others and have comparatively smaller under-64 pop-ulations than poppop-ulations in need of care will struggle to find ad-equate numbers of care workers in the coming years. The Korean government, too, should consider officially allowing more inter-national workers to work in care services. These foreign workers should be concentrated in underserved regions and given sys-tematic language and other skills training. Proper measures for managing these workers should also be established.

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People with People

in Mind

Ⅳ

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The number of newborns in Korea will continue falling, while the rest of the population continues aging at an accelerated rate. The absolute size of the elderly population will increase, and seniors in the future will have characteristics different from those of seniors today. Demographic changes are en-twined with social changes at large, requiring diverse policy measures for concerted structural responses. Policymakers should thus design policies that have room for flexibility and growth, while closely monitoring demographic changes, so as to help individuals adapt to social changes while also respect-ing their freedom of choice.

It is individuals who decide whether to bear and raise children. Macro-level socioeconomic factors nonetheless play a decisive role in shaping those decisions. The decline in birth rates and the resulting downsizing of the population, in turn, affect individuals’ values and attitudes and the socioeconomic environment at large alike. Effective responses to the con-sequences of the falling birth rates and shrinking population will require concerted efforts across all disciplines, including childcare, education, and labor. Education is central to en-hancing the productivity of the workforce. Investment is

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fore needed to improve the quality of education. Policy support for perinatal care, for both the mother and the baby, and for the health of children and youth is also essential to the health of the overall population. In order for the diverse policy pro-grams addressing the falling birth rates to have the desired ef-fects, it is important to ensure the continuity of those programs.

Population aging is another major factor expected to trans-form the structure of the Korean population profoundly. Social policy responses to population aging should especially focus on improving quality of life for seniors. Middle-aged employment, medical care, and LTC are critical areas of in which prepara-tions need to be made for the future and where policy re-sponses are most needed, given the increasing life expectancy and aging of the population in Korea.

Policy efforts aimed at minimizing middle-aged workers’ early retirement from their main careers or even the labor market will carry great significance for both individuals’ lives and the pro-ductivity of the society as a whole. Reforms are needed to enable middle-aged Koreans to work longer in their main careers, and to ensure their swift and effective reemployment when they do re-tire from their main careers.

The growing elderly population is expected to raise the demand for medical and long-term care dramatically in the coming decades. In preparation for this, policy action based on long-term

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Ⅳ. Conclusion 45

perspectives is necessary now. It is particularly important to en-sure the reliable supply of medical workers in anticipation of the rapidly growing demand. Equally important is to increase public LTC providers and secure more care workers in order to ensure the reliable management of LTC in Korea.

Low birth rates and population aging are phenomena experi-enced by all high income countries worldwide. However, the rate of decrease in birth rates is especially high in Korea com-pared to other countries. The Korean population and society are aging at an unprecedented rate. Demographic changes and policy responses are therefore expected to exert transformative effects on all areas of policymaking, including economics, fi-nance, social security, transportation, and the urban environment. Active efforts are needed to minimize and coun-ter the adverse effects of these demographic changes in all these areas.

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